Leading benefits of outsourcing to a contract manufacturer
Is it better to manufacture a component in house or outsource to a contract manufacturer? That’s a common debate among an OEM’s production, design, marketing, and management personne. Each company’s situation is unique so there’s no one-size-fits-all answer to this question. Here are some major benefits to consider when debating whether to outsource a component’s manufacture and rely on a contract manufacturing partner.
Reduces your costs
Cost reduction is a major reason for many decisions to outsource. The advantage to the OEM is that overhead costs can be passed along to the contract manufacturing partner. The partner carries related labor and inventory costs rather than the OEM. If new equipment was needed for in-house manufacturing, there may be a reduction in capital expenditures since the equipment is the partner’s responsibility. For example, let's imagine that a manufacturer of metal fasteners decides to enter a new market segment and produce plastic screws. That OEM can work with a plastics molding contractor who takes on responsibility for the materials and finished goods inventories as well as labor costs. The OEM is also spared the cost of purchasing plastics molding equipment.
Makes your company more nimble
Working with contract manufacturing partners adds production capacity to an OEM much more quickly than adding capacity in house. This equates to more flexibility so you can scale up or down based on market demand. In the case of the metal fastener company mentioned before, working with a plastics molding contractor allows them to quickly take advantage of an emerging market need.
Expands your capabilities
When you work with a contract manufacturing partner you can tap into the special expertise of its people. Also, your partner may have more sophisticated equipment and/or utilize newer technologies that are now yours to access. The metal fastener OEM added a new set of skills and expertise by working with a plastics molding partner.
Lets your company focus on strengths
Every company has core competencies. Moving too far afield from these can lead to problems. If a component or assembly falls outside an OEM’s core competencies, outsourcing to a contract manufacturing partner gets the part made without diverting energies from the OEM’s strengths. The metal fastener company's core competency is metalworking. Partnering with the plastics molder means they can take advantage of a new market segment without moving away from their strength.
Maveric Automation - a beneficial partner
We are a contract manufacturer with unique expertise in combining electronic and mechanical components. We offer a range of PCB and component design, fabrication, and assembly capabilities. Whether manufacturing a simple part or a complex assembly, we take pride in meeting and exceeding your expectations for quality, delivery, value, and service. When you need a great partner to supply high quality components or assemblies, contact Maveric.